Steelworkers win 'Good Corporate Citizenship Clause' at BPA

By DON McINTOSH, Staff Reporter

At their Aug. 9 convention in Las Vegas, members of the United Steelworkers of America (USWA) heard from U.S. Secretary of Energy Bill Richardson what they'd waited nine months to hear: Bonneville Power Administration (BPA), the federal agency that produces much of the Northwest's electricity, will no longer sell cheap power to companies that don't obey the law.

The new rule, known as a "Good Corporate Citizenship Clause," was pushed by the Steelworkers as a way to put pressure on Kaiser Aluminum, which broke federal labor law when it locked out 2,900 striking workers Jan. 14, 1999. Kaiser is one of 12 companies that have received low-priced "cost-based" electricity from the BPA.

Now, it appears, the Good Corporate Citizenship Clause the union fought for will outlast the dispute that motivated it: The USWA and Kaiser have agreed to an arbitrated settlement, and most of the locked-out workers will be back on the job by the end of September.

Because Kaiser settled with the Steelworkers, the union will not be pushing for the company to be denied the low-cost electricity.

Kaiser's two Spokane plants currently receive low-cost BPA power under a special program for Direct Service Industries (DSIs). DSIs are facilities such as aluminum smelters and large chemical manufacturers that use very large amounts of electric power at constant rates, 24 hours a day. For these companies, BPA has historically negotiated five-year contracts selling power at "cost-based" rates. For the last year, the agency has been drawing up terms and negotiating with DSIs for the next five-year contract, which will run 2001 to 2006. Those contracts will be finalized by Oct. 1.

Under the new Good Corporate Citizenship rule, in order to receive cost-based (reduced rate) electric power, companies will be required to obey federal, state and local laws, regulations, and orders in areas such as equal employment opportunity, the environment, labor, occupational safety and health, securities, banking, public integrity, and anti-trust business practices.

Enforcement of the clause will be at the discretion of the BPA administrator, with the approval of the secretary of energy. It's not clear what process the BPA would use to determine whether a company should be denied power for breaking the law. BPA spokesperson Perry Gruber said none of the agency's existing DSI customers are currently at risk of being considered bad corporate citizens.

The new rule, instituted despite the opposition of the DSIs, is based on the idea that cheap government electricity is a privilege granted by citizens to industries that are vital to the local economy, and that granting this privilege entitles the public to hold companies to certain minimum standards of behavior.

The actual cost to the BPA to generate electric power is roughly $6 per megawatt hour. After the agency adds costs for transmission, salmon restoration, a subsidy for residential rates, and debt payments for a set of nuclear plants, the cost is $23 to $25 per megawatt hour.

Five years ago, that was considered expensive, said USWA District 11 staff representative Gaylan Prescott, former union president at a Reynolds Aluminum smelter in Longview, Wash. Now, prices have soared, and the BPA's rates are one-fourth the price on the open market.

Reduced access to cheap power is one of the factors driving several recent closures of Northwest aluminum smelters.

While the now-expiring power contract was being negotiated five years ago, Prescott said, energy wholesalers like Enron were approaching the DSIs with short-term contracts for power at lower rates than the BPA was offering, trying to lure customers away from BPA. A number of DSIs took the bait, cutting or even eliminating their BPA power purchases. Then, when those contracts expired, Enron raised its prices dramatically.

Meanwhile, to make up for the lost revenue, BPA cut $600 million a year in expenses by laying off workers, subcontracting, and deferring equipment maintenance and signed long-term power contracts with three customers outside of the Northwest region.

Now, Prescott says, there isn't enough power to satisfy the DSI customers. Most of the agency's power is generated at 29 dams along the Columbia and Snake rivers and one nuclear plant in Richland, Wash. The BPA's first legal responsibility is to provide power to public utility districts. Private utilities are the next priority, followed by the DSIs. Demand for BPA power from public and private utility customers has gone up so substantially that the BPA is having to cut the amount of power it can sell to DSIs.

The BPA will be dividing up just 1440 megawatts among all its existing DSI customers - 75 percent of what they were receiving in the last contract.

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